Mexican Auto~Car Market~Marketplace Snapshot

Following two consecutive years of declines in product sales, the marketplace registered 3.3% fewer automobiles, to 188,944 models, during Q110, meaning that domestic product sales are yet to bottom out. Provided that we anticipate demand in 2010 to be assisted by the base impact from 2009 product sales, we forecast sales to develop by just over 6% y-o-y, to 834,000 units, by 2010. However, impeded by an anticipated slowdown within the US economic activity in 2011 and the proposed tax hikes domestically, we expect autos sales to recover to 1.12mn units by the end of 2014, having only partially recovered from the one.14mn models sold in 2007.

Recovery in autos production, nevertheless, is likely to be quicker, as we anticipate carmakers to progressively focus on exports to drive up their capacity utilisation. Following a close to 10% y-o-y increase in manufacturing, to one.73mn units in 2010, we expect manufacturing to achieve 2.33mn models by the end of 2014. We think that a major support to this degree will arrive from targeting much more growth-promising markets in Latin American and Asia.

Indicators of these currently emerged final yr when India’s Tata Motors, in partnership with local manufacturer Grupo Autofin, announced plans to create its ultra-low-cost Nano model in Mexico from 2012 with the view to supply its vehicles within the Latin American marketplace. Meanwhile, Honda Motor, in November final year, created an expense of US$ 6mn inside a manufacturing line at its El Salto plant to help assemble its new CR-V sport utility vehicle (SUV) at the plant. Certainly, such investments have helped Mexico rank in the third placement in BMI’s regional ratings this quarter.

BMI points out that an additional advantage to Mexico from such expansions is going to be the emergence of an integrated supplier base, within the presence of the two nearby and global suppliers. Getting constructed strong associations with international clients, nearly all Mexican vendors are venturing for globally recognition and expertise via acquisition of businesses of their competing international firms. Metalsa and Katcom current stand since the greatest instance of the trend.

Although the Mexican cars industry association AMIA has called for the federal government to introduce regulations and incentives to encourage new automobile sales, BMI stresses that improved autos financing offers the best possible assistance for recovery in the country’s autos need.